Congress may be ready to negotiate on taxes, spending

Published: Friday, Nov. 16, 2012 9:55 a.m. CST

By David Lightman and Maria Recio — McClatchy Newspapers

(MCT) — WASHINGTON — Congress’ rank and file — which will decide whether the nation avoids plummeting off a fiscal cliff in less than seven weeks — is showing a new willingness to negotiate and compromise, a message their leaders will carry Friday to President Barack Obama.

But they will also warn in the first post-election White House talks aimed at crafting an agreement that those lawmakers have a shared history that has to be overcome. For the past two years, Washington has been paralyzed by partisanship, and the scars of the battles are still raw.

What’s different now is that lawmakers heard the message from voters last week: Stop bickering and get the economy moving again. And don’t wait to do something until hours before the Bush-era tax cuts expire Dec. 31 and automatic spending cuts take effect two days later.

Senators and members of the House of Representatives are suggesting almost everything is negotiable — spending cuts, tax rates, Medicare, Medicaid — and there’s widespread agreement any deal has to be a combination of cuts in spending and increases in tax revenues.

Even the most contentious point, the top tax rates, appears to be on the table.

“People are really eager to get an agreement. I’ve rarely seen a mood like it,” said Senate Budget Committee Chairman Kent Conrad, D-N.D.

“There’s a willingness to give serious consideration to new revenue that wasn’t there before the election,” agreed Sen. Mike Crapo, R-Idaho.

Lawmakers are listening to the voters. Two out of three Americans say that going over the fiscal cliff will have a mostly negative impact on the economy. Sixty percent say it would have a mostly negative impact on their own financial situation, according to a post-election poll by the Pew Research Center.

First, the key players have to get beyond past disputes. The major figures at Friday’s White House meeting and in the weeks ahead will be the same people who’ve fought over the past four years: House Speaker John Boehner of Ohio, Democratic leader Nancy Pelosi of California, Senate Majority Leader Harry Reid of Nevada and Republican leader Mitch McConnell of Kentucky.

The stories of deals almost done have been well told, notably the Obama-Boehner talks in 2011 to get a grand deficit-reduction bargain. Those talks went to the brink of agreement, then fell apart when it became clear the rank and file in Congress — in both parties — would not accept it.

This time, the stage is set for more comity. In the week and half since the election, most leaders, including Obama, have sent subtle but meaningful signals that they’re willing to soften their positions.

At the president’s news conference Wednesday, he suggested he might be willing to bargain on his oft-stated goal of raising the top income tax rate from 35 percent to 39.6 percent for high incomes.

“With respect to the tax rates, I just want to emphasize I am open to new ideas,” he said, and White House officials later explained he would consider a top rate of 37 percent or 38 percent, presumably as long as he also limited deductions so those people still would pay more taxes.

Any agreement will ultimately need votes from both parties to win approval, and Republicans will insist on meaningful changes and cuts to entitlement programs like Medicare and Medicaid.

Republicans have a 240-190 advantage in the House, but an estimated 50 Republicans are considered hardliners unlikely to vote for any legislation that increases revenue. About 50 Democrats are also seen as difficult to budge, as they’ll insist on more taxes for the wealthy and fewer cuts in social programs.

Democrats control 53 of the 100 Senate seats, but getting seven Republicans to go along is not seen as a problem — as long as the partisan rhetoric doesn’t get too heated.

So far, it hasn’t.

“The president said we get the revenue if we limit the (tax) deductibles. I’m willing to look at the raw numbers,” said Rep. Gene Green, D-Texas. His Texas Republican colleague, Rep. Bill Flores, also spoke in conciliatory terms.

“I feel optimistic we’ve got the tools to fix it,” he said. The House’s approach earlier this year — continuing the current rates for a year — was the right approach, Flores said.

Obstacles to compromise are still prevalent. On Wednesday, Obama and Republican senators engaged in sharp rhetorical warfare over whether United Nations Ambassador Susan Rice was qualified to be secretary of state.

And lawmakers elected in carefully drawn House districts where conservatives or liberals dominate were less inclined to compromise.

“I have a constituency and I ran on this platform” of no new taxes, said Rep. Kenny Marchant, R-Texas. “Raise taxes on the top 2 percent is all I’ve really heard. I’m not going to agree to that. It’s a non-starter for me and the district I represent.”

On the other side of the political spectrum was Rep. Richard Neal, D-Mass.

“You have to be emboldened by this president and his stature. He won the election convincingly,” he said.

The potential for majorities, though, seemed to be there for the wooing. As Rep. Eddie Bernice Johnson, D-Texas, put it, “Everybody who won had to have gotten the message to work together.”